TindyPM

Understanding Planned Value (PV)

Planned Value (PV) is a fundamental concept in project management that helps assess a project's progress by comparing the budgeted cost of work performed up to a specific point in time with the overall project budget. In simpler terms, it tells you how much value you should have completed based on the amount of budget you've spent so far.

Imagine a project divided into stages, with a set budget allocated to each stage. As you complete tasks within a stage, the PV represents the total budgeted cost of all the completed tasks.

Why is PV Important?

PV plays a vital role in monitoring project health and identifying potential risks. By comparing the PV with the actual cost incurred (AC) and the Budget at Completion (BAC), you can calculate metrics like Schedule Performance Index (SPI) and Cost Performance Index (CPI). These metrics indicate if the project is on track (both in terms of schedule and budget) or if there are deviations that need corrective actions.

For example, a consistently low PV compared to the BAC might signal that the project is lagging behind and exceeding the planned budget. This prompts closer monitoring and adjustments to ensure project success.

Planned Value (PV)

PV represents the budgeted cost of work performed up to a specific point in time.